TechFlow, August 1 - According to Jinshi Data, "Fed whisperer" Nick Timiraos said that the slowdown in employment over the past three months may open the door for Federal Reserve officials to consider rate cuts at their next meeting in September. At the very least, it highlights the difficult balancing act they face amid an economic slowdown and rising inflationary pressures. Fed officials had felt comfortable holding interest rates steady this year due to the labor market's previously robust job growth. However, significant downward revisions to May and June employment data have changed that picture. Fed officials previously stated they had reduced emphasis on overall job growth, as it declined alongside a slowing expansion of the labor force. When labor supply shrinks, unemployment can remain stable or even fall despite slower job growth. But Fed Chair Powell pointed out this week that stable unemployment may mask underlying weakness—when falling participation coincides with declining job openings, the balance is inherently fragile. He mentioned "downside risks" to the labor market six times during his press conference, suggesting that actual weakness could justify a shift toward policy easing.
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